Softbank leads home-team bid for ailing Nippon Credit

CBS.MarketWatch.com

TOKYO (CBS.MW) -- Softbank Corp., Japan's top investor in all things Internet, has put together a proposal with three other leading Japanese companies to buy the nationalized Nippon Credit Bank for an entree into online banking.

Government banking authorities have said they'd like to sell NCB by the end of this year, but they now suggest it'll probably take a bit longer than that to conclude a deal.

Following the recent controversial agreement to sell Long-Term Credit Bank -- another failed lender brought under state control -- to a consortium led by Ripplewood Holdings LLC of the U.S, a Japanese bid for NCB from Softbank's assembled investors would be welcomed.

It's possible the foursome could find themselves competing with foreign buyers. U.S. investment bank Lehman Brothers Holdings Inc.
leh
and France's Paribas SA are understood to be mulling rival bids for NCB, which was brought under state control late last year after collapsing under the weight of massive bad loans.

A Softbank move into online banking would come as no surprise. Converting NCB assets into an Internet banking platform would complement the company's numerous electronic-commerce ventures -- the latest, unveiled Thursday, being to sell music over the Web (see full story) -- as well as its forays into e-broking. See full story.

Softbank shares have roared to company records all week, and Friday was no exception. The stock zoomed as high as 61,300 yen before closing at 61,000,up 3600 yen. After the market closed, Softbank posted a group net loss of $33 million in the half year through September. See full story.

Tokio Marine's U.S.-listed shares.

The other financial firms in the Softbank squad, Tokio Marine & Fire and Orix, are keen to extend their expertise to the Internet and diversify into e-banking. Tokio Marine is already partnering with American online broking supremo Charles Schwab Corp.
SC.H, +0.00%
to launch a full-service securities venture in Japan next month. See full story.

Orix and Tokio Marine confirmed they're considering buying NCB with Softbank and others, but both declined to comment further on their proposal.

Orix's ADRs.

Shares of Orix jumped 750 yen, or 4.9 percent, to 16,200 yen.

Tokio Marine erased early gains and lost two percent, down 27 yen to 1343.

For Ito-Yokado, offering financial services both online and at supermarkets and convenience stores nationwide could be a way to offset the group's falling retail sales. The Ito-Yokado group has a network of more than 8,000 stores throughout Japan and includes Seven-Eleven Japan Co.
svely
a partner in some of Softbank's e-commerce ventures.

Local media report Ito-Yokado has been considering applying for a bank license. It has also pursued separate negotiations with NCB to buy a subsidiary Nippon Credit Trust Bank, but because those talks have made little headway the retailer's strategy has shifted, according to the Nihon Keizai business daily.

If it goes through with any of these options, Ito-Yokado would be the first Japanese retailer since the end of World War II to enter the banking business. Its shares surged 1000 yen, or 12.5 percent, to close at 9000.

None of the four companies offered clues to what they consider a fair price for NCB. The bank has assets of 6.5 trillion yen ($62 billion) in assets, considerably less than Long-Term Credit Bank's assets of 11 trillion yen.

Ripplewood has offered to pay about $1.15 billion for LTCB, conditional on completing due diligence. Some Japanese hardliners complain the September sale agreement comes close to highway robbery.

Michio Ochi, who became head of Japan's Financial Reconstruction Commission in Japan's cabinet reshuffle in October, is believed to be more hawkish than his predecessor and wants to settle the NCB matter soon.

"We can't spend much time choosing (the winning bid)," Ochi told reporters at a regular news conference Friday. "The aim is to reach a conclusion within a few months."

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.